They Spy

When a national specialty retailer of home goods developed a new prototype store, the design involved a series of displays using color-changing lighting by Color Kinetics (Boston) for visual effects. Before rolling out the displays nationwide, the retailer wanted to know how well the luminescent effects were working. It hired Merchant Mechanics (Lawrence, Mass.) to analyze the effects of the lit displays on shoppers.

Merchant Mechanics, one of a handful of retail consulting firms that conduct behavioral research, developed a test model for two of the retailer's stores – one with the lighted displays and one without – and videotaped browsers' reactions at both locations. Factors it evaluated included the percentage of passersby who stopped and investigated the displays, and how long they lingered.

“Merchant Mechanics conducted two levels of research,” explains Kathy Pattison, Color Kinetics'vp of marketing. “Hidden cameras tracked shoppers, timed them and watched behaviors. But the firm also administered post-shopping interviews.” The results yielded an informative picture: Consumers lingered longer in the stores with the color-changing lighting than in those without.

Observing, videotaping and interviewing shoppers is nothing new for retailers anxious to determine how well their merchandising displays are working. Envirosell (New York), for one, has built a strong reputation around the practice. And Grid2 International (New York) videotapes clients' existing stores and analyzes the results before making design recommendations. But the effort has intensified lately, according to Merchant Mechanics ceo Matthew Tullman, because of the tenuous economics of retail. “What we're seeing right now,” says Tullman, “is that retailers are looking to boost sales without spending tons of money. With evaluations prior to rollout, they are able to make smaller changes in their store designs and displays using the materials they already have.” Merchant Mechanics calls its video-based service Retail Forensics™, “the empirical science of revealing how retail spaces influence buying behavior.”

Companies with backgrounds in visual perception and spatial navigation try to decode the psychology of shoppers in a particular environment. “We watch individual parts of a store for such details as the order in which shoppers browse products,” explains Tullman.

Evaluated data show which actions lead to purchases. Once problems – such as, say, obstacles in the flow of traffic – are diagnosed, the firm makes suggestions to retailers about how to ameliorate the environment. Before Southwest Bell became a part of Cingular, Merchant Mechanics researched the company's store design and offered improvements for the prototype. Tullman says his team's work influenced the new company's current retail rollout.

Though videotape has been the staple of consumer observation, Merchant Mechanics sometimes utilizes abbreviated surveys to determine the shopper experience. Mini-interviews of 20 seconds or so with customers while they're still at the point of sale yield far more accurate information than after-the-fact interviews, Tullman feels. “We call these critical-point interviews, very short and area-specific. We catch them right in the middle of a particular context,” he says. “If we talk to them afterwards, the information becomes deluded; they forget how a section of the store made them feel.”

Anyone familiar with the work of Paco Underhill knows of the power of videotaping customer behavior. His New York-based research company, Envirosell, gauges consumer behavior by placing video equipment at particular displays or fixtures. “Retail clients come to us saying things like, 'We don't know if the display is responsible for sales or if something else is in play,'” says Tom Moseman, the company's senior vp. “By making ratios of the number of people who notice the fixture, how many shop at that point and who buys, a more accurate picture of the customers'thinking begins to develop.”

Moseman says retailers like Best Buy are always trying to ascertain information about their interactive kiosks. “One of the most important things we have learned from research of interactive displays is that they have a far greater impact if they are accompanied by trained staff members,” says Moseman. “Otherwise, video reveals that shoppers investigate the displays for only 30 seconds, max.”

Grid2 International (New York) also videotapes store environments for its clients. But because it's primarily a design firm, its consulting jobs involve the most “outside of the box” thinking, often incorporating uncharted design elements.

When Grid2 began work with Barnes & Noble in 1990, for example, the book retailer sought to prevent customers from eating, reading or lingering in the store. After conducting video research and consumer interviews, Grid2 concluded that shoppers wanted just the opposite. “Consumers expressed a strong desire to be able to browse and read the books,” says Martin Roberts, Grid2's president. “They wanted to be able to sit and spend time in the store, and food facilitated that leisure.” So the designers recommended incorporating Starbucks coffee shops into Barnes & Noble locations, along with tables, chairs and comfortable sofas. “Soon thereafter,” says Roberts, “The New York Times hailed Barnes & Noble as the best gathering place to meet people with the same interests.”

Shopper Trak specializes in what it calls “macroscopic metrics” (traffic count) for retail, a departure from other firms'psychological- and design-based services. Instead of analyzing shopper behaviors, the firm simply counts the number of people who come into a store, and when. “We're a technology company,” says Shopper Trak president Bill Martin. “We have sophisticated counting devices for specific business applications.”

An Eddie Bauer store wanted to determine how well its display windows were changing the flow of traffic into the store and affecting purchases. Shopper Trak surveyed consumers passing in front of the store and found that different age brackets came by at different times of day. The retailer decided to place a plasma display screen outside with graphics that were customized for morning and evening crowds. During early hours, visuals were directed at upper-middle-aged women; afternoon graphics changed to images of teens. Eddie Bauer felt that traffic into the store increased 37 percent after the assessment and alterations.

Shopper Trak's Martin notes that stores often don't really know at what rate they convert shoppers to buyers. “I recently met with RadioShack, which just initiated a 20-store pilot, but nobody there had good estimates of the conversion percentages,” he says. “When a retailer thinks it's capturing 80 percent of its shoppers and it discovers it has only 20, it's heart attack time for management.” But therein lies the impetus for retailers to seize upon technology as a quick, relatively simple way to understand shoppers'in-store experiences. “Retailers realize they have tremendous opportunity here,” he says. “In the next five years, retailers with video devices will have the competitive advantage.”